Labour accused of double standards over Africa gas pipeline
The Government has been accused of double standards for opening the door to a fossil fuel pipeline in Africa despite banning new licences for oil and gas production at home.
UK Export Finance (UKEF), a government department, is considering approving up to $1.15 billion (£870 million) of taxpayer investment in a major liquified natural gas pipeline in Mozambique.
Claire Coutinho, the shadow energy secretary, said it was incoherent for Labour to fund new fossil fuel projects overseas while banning new licences in the North Sea.
The Mozambique project, which is being run by French energy giant TotalEnergies, was put on hold in 2021 after conflict erupted in the region.
The company is now seeking to restart work on the $15 billion (£11 billion) pipeline, which it has been estimated could produce more than the combined annual greenhouse gas emissions of all 27 EU countries over its lifetime.
UKEF, which reports to Jonathan Reynolds, the Business Secretary, is now actively in talks about committing the funding for the project after it was initially given the green light in 2020 under Boris Johnson.
“Labour’s energy policy is nonsensical,” said Ms Coutinho. “The Government appear happy to sign off on oil and gas investments abroad, whilst waving goodbye to tax receipts and jobs at home by shutting down the North Sea.
“We will be the only major economy shutting down our own domestic oil and gas production and it will go down in history as a terrible act of economic self-harm.”
Ed Miliband, the Energy Secretary, has been accused of threatening the jobs of thousands of energy workers with plans to end new licences to proposed oil and gas fields that have not already been approved.
Mr Miliband will say on Tuesday that pushing through solar farms and pylons in swathes of the countryside to switch to green energy is the “national security, energy security, economic fight of our time”.
UKEF is now in the process of briefing ministers, The Telegraph understands, before a final decision is made.
A decision would normally be made by the Secretary of State for Business and Trade but could be passed up to Sir Keir Starmer.
The US and Dutch governments are also considering financing the project, which TotalEnergies hopes to restart before the end of the year.
The firm declared a force majeure on the pipeline project in 2021, suspending its contractual obligations, after thousands were killed during a violent Islamist rebellion in the region.
UKEF, which is an independent government body strategically aligned with the Department for Trade, has said its role is to ensure that “no viable UK export fails” because of a lack of private funding by extending loans, credit and insurance for overseas projects “while operating at no net cost to the taxpayer”.
However, critics say oil and gas represent a poor investment as rapid global decarbonisation drives down demand in the long term.
‘Ethical responsibility’ to withdraw
Green groups also said approving funding for the pipeline would undermine Labour’s green credentials.
Tony Bosworth, a climate campaigner at Friends of the Earth, said: “The Government has set out its intention to be a global climate leader.
“Withdrawing its defence of legal challenges to fossil fuel projects in the UK, such as the Whitehaven coal mine and North Sea oil and gas, is a very positive first step.
“But real global leadership must mean also stopping funding fossil fuels abroad, starting with the proposed gas mega-project in Mozambique.”
Daniel Ribeiro, of Friends of the Earth Mozambique, said the pipeline would “create global injustice”.
He added: “There is no room for this project or others like it to be developed if we intend to meet climate goals and have a chance of containing the impacts of climate change. Over its lifetime it is estimated to result in up to 4.5 billion tonnes of CO2e [carbon dioxide equivalent] emissions.
“UKEF has the power and the ethical responsibility to withdraw from financing a project that will result in long-term harm across the world.”
Shortly after it was first approved, the Conservative government said UKEF would no longer provide “any new direct financial support for fossil fuel energy overseas” but that projects already given the go-ahead would go through.